Revised Penalties for NGOs Under Foreign Contribution Regulation Act

The Ministry of Home Affairs (MHA) has announced modifications to the penalties associated with violations of the Foreign Contribution (Regulation) Act, 2010 (FCRA) concerning the receipt and utilization of foreign contributions by non-governmental organizations (NGOs). This directive was issued on Monday, leveraging the powers granted under Section 41(1) of the Act.

According to the notification, under the revised regulations, organizations that allocate more than 20% of their foreign contributions to administrative expenses—contravening Section 8 of the Act—will incur a penalty of either ₹1 lakh or 5% of the excess amount spent, whichever is greater. Additionally, for violations of Section 8(1) and Rule 4 of the Foreign Contribution (Regulation) Rules, 2011, if foreign contributions are used for gambling or high-risk activities, a fine of ₹1 lakh or 30% of the invested amount will be imposed, whichever is higher. Furthermore, 100% of the earnings derived from such activities will also be reclaimed, as stated in the notification. In cases where foreign contributions are diverted for purposes other than those for which they were received, a penalty of either 30% of the diverted amount or ₹1 lakh will apply, whichever is greater. Similar penalties will be enforced if foreign contributions are accepted or utilized in violation of the Act, or if funds are used for activities in states or union territories without proper registration.

In a separate notification issued on Monday, the government has revised the rules governing the receipt of foreign funds. NGOs must now select their objectives and areas of work from a predetermined list when applying under the Foreign Contribution (Regulation) Act, 2010. The updated regulations permit various religious activities; however, conversion (proselytization) is explicitly excluded from the eligible categories for registration under the Act. The ministry also indicated that if any organization’s key officials include foreign nationals alongside Indian citizens, their applications for registration or prior approval to receive foreign funds will generally not be considered. Nonetheless, there is an exception in the revised rules, allowing the central government to issue orders regarding specific cases or circumstances where foreign nationals may be permitted to serve as key officials in organizations seeking registration or prior approval under the Act.